- Argentina leads the crypto-adoption rate in Latin America, surpassing Brazil.
- Argentines turned to crypto due to high inflation and strict currency controls.
- President Javier Milei’s pro-crypto stance has attracted major investments by crypto firms.
Argentina now leads the crypto-adoption rate in Latin America. The country recently surpassed its neighbor and football rival Brazil to become the region’s top user of digital currencies. Although the reason behind this rapid increase of crypto holders in the country does not come from a good financial place, the country is shaping up to become a role model of what digital currencies can do for struggling economies.
According to data from Chainalisys, Argentina moved over $91 billion from June 2023 until June 2024. Moreover, stablecoins appear to be the Argentine’s preferred choice of digital currency, totaling 68% of the total cryptocurrency movement in the country. Bitcoin makes up for 14.7% of crypto transactions, other altcoins 13.4%, and Ethereum sits at 10%.
Why Argentina is Turning to Crypto
Argentines have dealt with one of the most volatile economies in the world for over a decade now. Its native currency, the Argentine Peso (ARS), became one of the fastest-losing fiat currencies in the world since 2010 – with a staggering 90% devaluation against the dollar.
Currently, the country records an annual inflation rate of 209%. Over the past 365 days, the highest inflation recorded a staggering 263.4% year-over-year. Needless to say, this amount of uncontrollable inflation is enough to destroy economies, and even common citizens could suffer from holding a currency that loses its value so dramatically within a year.
This led to an increasing “dollarization” of the Argentine economy, leading the people to negate the Peso in their everyday lives – and trade in the foreign U.S. Dollar instead.
The move into crypto began after the Government implemented the measure of limiting the purchase of U.S. dollars per citizen to $200.00 per month – a far cry from the previous $10,000 limit. Also, the decreasing creation of formal jobs led to more and more people “informally” being paid in crypto instead of pesos.
Argentina’s push into crypto is also one of the core reasons for the region’s crypto adoption growth. Data from Chainanalysis reveals Latin America owns the second-biggest year-over-year growth rate in the world – only behind Sub-Saharan Africa.
Can Bitcoin Become Legal Tender in Argentina?
The current President Javier Milei ran an extremely pro-crypto campaign in 2023. So much so that on the night of his election, Bitcoin gained over 3% in value. During the campaign, Milei promised several measures to enhance the adoption of crypto by the population, including the formal adoption of ‘dollarization’ in the economy.
He also emphasized that ‘Bitcoin would allow money to return to its creator, the private sector,’ and went as far as to claim that he would abolish Argentina’s central bank with BTC as an alternative.
Because of that, many speculated that under Milei’s rule, Argentina could follow El Salvador’s footsteps and adopt Bitcoin as legal tender. In truth, this conversion would be extremely more complex when compared to El Salvador’s size and place in the global economy.
However, President Milei is taking several steps towards promoting even more adoption of digital currencies. This year, the country approved the use of Bitcoin to bind legal contracts between companies. Also, Argentina now allows tenants to pay their rent in Bitcoin.
This pro-crypto movement is far from going unnoticed. Some of the largest cryptocurrency companies in the world began investing in the country, including Binance sponsoring the National football tournament, while Tether invested over $100 million in Argentine agriculture.
While the move to adopting BTC as legal tender seems distant, Argentina’s adoption and acceptance of crypto in the country have laid the groundwork for not only a more decentralized world – but also an excellent use case on how digital currencies can serve as a hedge against inflation.
